East End Tech: The Square Deal for Business

It’s LaborDay weekend, the traditional end to yet another fantastic summer on the EastEnd. But the holiday season is just beginning for the local small businesses that work so hard to make this place so special for us interlopers from the City.
(Could someone please explain why we celebrate “LaborDay” at the end of vacation season instead of the beginning? Seems totally backward. But I digress.)
Part of my end-of-summer ritual is to settle up with the outstanding tradespeople who put in extra hours over the summer. Last week I was surprised and delighted when Mike, my super awesome pool guy, asked me what I thought about a technology called Square.
This isn’t foursquare, the faddish location app that lets you check into various restaurants, bars, stores and more. I’m talking about the mobile payments system that has quickly become one of the hottest tech startups in all the land.Square was founded by JackDorsey, one of the brains behind Twitter. With Twitter, Dorsey showed once again that great technology typically disrupts through simplicity. Square follows the same formula. It’s an incredibly simple system that solves a specific problem for business—by letting owners transform their smartphones into credit card readers. And it’s making a huge difference.
Any merchant can sign up online in minutes. There are no bank deposits, forensic accounting forms, or merchant account fees. Businesses receive a small square device (hence the name “Square”) that plugs into any smartphone and lets any customer swipe a credit card. In an instant, merchants join the information age and improve their cash flow significantly.
Square is catching on like wildfire. The big boys are jumping in. Starbucks recently made news by announcing a $25 million investment in the company. Even better: it will soon start using Square in all of its stores.
Not to be outdone, Paypal then made a deal with Discovery (the credit card company, not the TV network) to bring its own mobile payments systems to over 7 million retail locations. Their mobile swiping dongle is shaped like a triangle, presumably to avoid confusion from people who flunked geometry.
Square benefits customers in more ways than meets the eye. It’s easy and convenient; we no longer need to waste time writing checks and balancing our statements. Even better: we earn more mileage points for using our cards.
But Square truly disrupts by changing the mindset of small business merchants. Without Square, Mike has to wait weeks if not longer for lazy customers like me who forget to pay on time. He has to go back and forth to the bank and make deposits. He has little control over cash flow and receivables, which can squeeze him dry if he has to lay out money to buy more pool supplies.
With Square, Mike gets his payments instantly, in real time. And while Square charges a 2.75% service fee for each click, it’s still cheaper than the 3 to 5% he would pay to a major credit card company. Mike also has the option of paying a flat fee—$275 per month—for unlimited card swipes. This makes it easier for him to predict his business and plan for busy and quiet seasons.
The final advantage: because Square attaches to his smart phone, Mike can swipe cards at every customer’s backyard. This is crucial to anyone who doesn’t have a fixed storefront or central office.
We’re still in the early stages of this technology disruption. All of the big players are launching their own services, so it remains to be seen which one(s) will prevail. But if you’re a business owner—small or large—treat yourself to a LaborDay present and check out what Square (or its competitors) can do for you.